Google-backed Transphorm Raises $25M For Power Conversion Tech

Ucilia Wang
, ContributorI write about renewable energy, electric cars and water techOpinions expressed by Forbes Contributors are their own.

A Google-backed startup called Transphorm said Thursday it has lined up $25 million to develop and market its novel power conversion technology, which it says can reduce power losses and save money for owners of data centers, solar electric systems and hybrid electric cars.

The company, based near Santa Barbara, garnered a lot of spotlight in February this year when it made an official public debut at Google Ventures’ Silicon Valley office to discuss its technology, which uses gallium nitride to convert power from direct current (DC) to alternating current (AC) or vice versa. The technology also can sit in DC-to-DC devices, which are designed to adjust the voltage and minimize power losses.

Many consumer electronic gadgets, servers and back-up power supply equipment can't run without power conversion devices. Electricity leaves the power plant as AC and gets converted to DC for powering laptops, for example. Solar panels produce electricity in DC, which needs to transform into AC for feeding the electric grid or for using the power onsite.

A bit of electricity is lost with every power conversion step, however, partly because of the power needed to convert the electrical current and partly because of the materials and designs of the converters. In some cases, cooling technology becomes a necessary part of an equipment because the power losses are dissipated as heat. For an example, in a hybrid car, a radiator works to cool the combustion engine while a second radiator cools the power electronic system that runs the electric motor. Transphorm said its technology could eliminate the need for the radiator to chill the power electronic system.

About 10 percent of the power is lost with each conversion step, and that can add up to terawatt-hours of power that just goes to waste. Transphorm claims its technology can cut that losses by up to 90 percent.

Silicon has been the material of choice for power conversion devices. Transphorm contends that silicon is near its limit in its ability to improve conversion efficiencies. Gallium nitride is better at preventing current leaks by holding on to the maximum voltage when it’s not delivering power, said Umesh Mishra, CEO of Transphorm, back in Februrary. Gallium nitride can't be found in nature, and producing it to make sure it doesn't degrade and lose its ability significantly is a big technical challenge to overcome.

Since unveiling its technology, Transphorm has showed off some products at conferences, including a diode and a 600-volt transistor, and demonstrated how these components can more efficiently boost power output. The company is working on a 900-voltage design using a federal grant. Transphorm plans to sell transistors separately, but it also plans to sell a more complete power conversion module that will contain both diodes and transistors.

Because gallium nitride isn’t commonly used in power conversion devices, Transphorm’s products will be more expensive than the silicon varieties initially. Mishra has said he expects to see the price drop to comparable levels in five to seven years, provided that demand is there. The company is initially targeting manufacturers who believe the power savings that can be achieved will more than make up for the premium prices Transphorm will charge for its devices. Ultimately, the startup will have to figure out how to manufacture cheaply to broaden its market reach.

The company has a small factory at its headquarters, but it hasn’t disclosed plans for mass production. Companies that are evaluating Transphorm’s technology include industrial control and automation equipment supplier, Yaskawa Electric Corp., and solar inverter maker, Satcon.

The $25 million is a D round for Transphorm, which has raised a total of $63 million since its inception in 2007. Aside from Google Ventures, its other investors include George Soros's Quantum Strategic Partners, Kleiner Perkins, Foundation Capital and Lux Capital.